Inspirit Energy Holdings Plc
Annual Report and Financial Statements
for the year ended 30 June 2014
Company Registration no: 05075088
1
Inspirit Energy Holdings Plc
COMPANY
INFORMATION
DIRECTORS
:
D Lenigas (Non-executive Chairman) (appointed 11/09/2013)
J Gunn
J Nazhat
N Jagatia
N Luke (appointed 26/07/2013)
COMPANY
SECRETARY
:
J Nazhat
REGISTERED
OFFICE
:
2nd Floor
2 London Wall Buildings
London
EC2M 5PP
COMPANY
REGISTRATION
NUMBER
:
05075088
REGISTRAR
AND
TRANSFER
OFFICE
:
SOLICITORS
:
INDEPENDENT
AUDITOR
:
NOMINATED
ADVISOR
AND
BROKER:
Share Registrars Limited
Suite E, First Floor
9 Lion and Lamb Yard
Farnham
Surrey
GU9 7LL
Nabarro LLP
Lacon House
84 Theobald’s Road
London
WC1X 8RW
PKF Littlejohn LLP
Statutory Auditor
1 Westferry Circus
Canary Wharf
London
E14 4HD
Westhouse Securities Limited
Heron Tower
110 Bishopsgate
London
EC2N 4AY
2
Inspirit Energy Holdings Plc
CONTENTS
Chairman’s statement
Strategic report
Report of the directors
Independent auditor's report
Group statement of comprehensive income
Group statement of changes in equity
Company statement of changes in equity
Group and company statements of financial position
Group and company statements of cash flows
Notes to the financial statements
page
3
4
7
10
12
13
14
15
16
17
3
Inspirit Energy Holdings Plc
CHAIRMAN’S
STATEMENT
FOR
THE
YEAR
ENDED
30
June
2014
INTRODUCTION
Since Inspirit Energy Holdings Plc’s interim results, important steps in the commercialisation of the Company micro
combined heat and power (mCHP) boiler have been achieved and the Group shows great progress in delivering its
business plan.
COMMERCIALISTION AND PROGRESS
The Group has entered the stage of finalising commercial design and committing to tooling with a number of its
engineering partners and suppliers. The significant investment made demonstrates the Group’s progress towards
achieving full certification approval and commercialisation of the Group’s highly efficient mCHP (micro Combined Heat
and Power) micro co-generation boilers.
A demonstration facility in Sheffield has been installed to establish the suitability of the mCHP boiler for customers and
allow technical staff to provide familiarisation training to installers.
A significant testing and field trial agreement entered into with Utilitywise Plc will allow the Group to test the appliance in
a range of demand cycles including full and partial utilisation and in several high-profile installation sites in the UK.
The mCHP appliance has been designed with the help of the company’s engineering and manufacturing partners:
• Adigo – advising on the remodelling of the original heater head and regenerator components of the Stirling
Engine design for the final appliance;
• GE Precision – developing and manufacturing the internals of the Stirling Engine with FEA analysis of the
Crankcase, Piston and Rhombic Drive Assembly that converts heat energy into the motion required to
generate the electrical output;
• Sentec – design of the control system including the user interface, diagnostics and management of the supply
back into the Grid;
• Enertek – design of the gas combustion system, heat recovery system; and
• Malvern – build trial units and will help to bring the product to market when fully commercialised.
On 26 June 2014, the Company raised £1,000,000 to fund the commercialisation phase of the Inspirit mCHP boiler.
On 11 September 2014, Dr John Bannister joined the management team as a full time consultant to the Company and
special advisor to the Board.
The Board would like to take this opportunity for thanking all of the Company’s staff and consultants for their hard work
during the year and our shareholders for their support.
The progress over the last year has been very positive and I hope we continue to make great progress in achieving our
goal of technological commercialisation.
D Lenigas
Non-executive Chairman
5 December 2014
4
Inspirit Energy Holdings Plc
STRATEGIC
REPORT
FOR
THE
YEAR
ENDED
30
June
2014
The Directors present their Strategic Report on Inspirit Energy Holdings plc (“the Group”) for the year ended 30 June
2014.
The Strategic Report is a new statutory requirement under section 414A of the Companies Act 2006 (Strategic Report
and Directors’ Report) Regulations 2013 and is intended to provide fair, balanced and understandable information that
enables the Directors to be satisfied that they have complied with section 172 of the Companies Act 2006, which sets
out the Directors’ duty to promote the success of the Group and Company.
REVIEW
OF
THE
BUSINESS
Inspirit Energy Holdings Plc, acquired Inspirit Energy Limited and began trading on the London Stock Exchange, AIM
markets on 26 July 2013. The Company is now exclusively focused on commercialising the Group’s unique and highly
efficient micro co-generation boiler.
The Company’s objective is to generate returns to shareholders via investment in renewable energy through
development of environmental or renewable energy products and services.
Inspirit Energy Limited is currently pursuing the development and commercialisation of a world-leading micro Combined
Heat and Power (mCHP) boiler for use in commercial and residential markets. The mCHP boier is powered by natural
gas and designed to produce hot water (for Domestic Hot Water or Central Heating) and a simultaneous electrical
output that can be used locally or fed back into the National Grid.
Inspirit Energy’s new washing machine-sized mCHP micro co-generation boiler is one of the industry’s most powerful
and energy efficient mCHP appliances for its size with simultaneous generation of up to 15 kilowatts of thermal output
and up to 3 kilowatts of electrical output. The mCHP boiler has been designed to be low maintenance and can be
installed by a certified gas-safe tradesman. The appliance’s patented engine will take the waste heat from the boiler and
convert it efficiently into electricity; first supplying the property where it is installed and feeding surplus electricity into the
National Grid.
The developments made in the mCHP micro co-generation boiler shows the great progress that the Company has
made during the year and the platform for success in the future.
Inspirit intends to explore opportunities to market and /or licence the underlying technology.
DEVELOPMENTS
DURING
THE
YEAR
On 13 September 2013, the Company entered into a £472,000 placing and an Equity Swap Agreement with YA Global
Master SPV, Ltd. at 2.8 pence per share.
On 26 September 2013, the Company announced that UK HM Revenue & Customs had accepted the Company’s
application to join both the Enterprise Investment Scheme (“EIS”) and the Venture Capital Trust (“VCT”) Scheme, which
are designed to offer a range of tax reliefs for investors.
On 14 October 2013, the Company announced an agreement with Sentec Ltd, for the final stage development of its
mCHP controls package. This will provide the appliance control and an energy management system that will feed back
into the National Grid.
On 9 January 2014, the Company announced a contract with Enertek International Ltd to assist with the final mass
manufacturing specifications and designs for the mCHP boiler’s key heating components. Enertek will assist the
Company in obtaining the necessary certifications required to sell this unique appliance initially in the UK and European
market places.
On 27 January 2014, the Company signed a manufacturing agreement with Malvern Boilers Ltd, to produce the initial
volumes of its mCHP boilers.
On 24 February 2014, the Company signed an agreement with Caring Homes Group, to install the mCHP boiler into
one of their care homes for the purpose of key customer testing and verification to demonstrate economic viability of the
appliance.
On 26 June 2014, the Company raised £1,000,000 through the issue of 71,428,571 new ordinary shares of 0.1p each at
a price of 1.4p per placing share to fund the next important commercialisation phase of mCHP boiler.
5
Inspirit Energy Holdings Plc
STRATEGIC
REPORT
FOR
THE
YEAR
ENDED
30
June
2014
BOARD
CHANGES
On 26 July 2013, Neil Luke was appointed as an Executive Director and Chief Operating Officer of the Company.
On 11 September 2013, David Lenigas was appointed as Non-Executive Chairman of the Company.
RESULTS
AND
DIVIDENDS
The Group made a loss after taxation of £1,293,000 (2013: loss of £78,000). The loss included an exceptional write-
down of £663,000 goodwill on consolidation relating to Inspirit Energy Holdings Plc. The Directors do not propose a
dividend for the year to 30 June 2014 (2013: £nil).
KEY
PERFORMANCE
INDICATORS
The key performance indicators are set out below:
PLC
S
PLC
STATISTICS
30
June
2014
30
June
2013
Change
%
Net asset value
£2,098,000
£59,000
+3456%
Net asset value – fully diluted per share
0.32p
0.08p
+300%
Closing share price
Market capitalisation
0.0112p
0.0125p
-50%
£7,342,276
£914,244
+703%
KEY
RISKS
AND
UNCERTAINTIES
Early stage product development carries a high level of risk and uncertainty, although the rewards can be outstanding.
At this stage there is a common risk associated with all pioneering technological advanced companies in their
requirement to continually invest in research and development. The Group has already made significant investments in
addressing opportunities in the renewable energy sector.
The Group has raised funds during the period as discussed in the ‘Developments during the year’ above. The Directors
feel that while this is sufficient for operating forecasts, further funding requirements are necessary to commercialise the
micro co-generation boiler.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The principal financial risk faced by the Company is liquidity risk. The Company’s financial instruments included
borrowings and cash which it used to finance its operations. At the year end, borrowings did not include borrowings
supplied from the bank. More information is given in Note 3 to the Financial Statements. The Company has no
significant concentrations of credit risk.
ASSESSMENT OF BUSINESS RISK
The Board regularly reviews operating and strategic risks. The Group’s operating procedures include a system for
reporting financial and non-financial information to the Board including:
•
•
•
•
•
reports from management with a review of the business at each Board meeting, focusing on any new
decisions/risks arising;
reports on the performance of investments;
reports on selection criteria of new investments;
discussion with senior personnel; and
consideration of reports prepared by third parties.
Details of other financial risks and their management are given in Note 3 to the financial statements.
6
Inspirit Energy Holdings Plc
STRATEGIC
REPORT
FOR
THE
YEAR
ENDED
30
June
2014
GOING
CONCERN
The Group meets its day-to-day working capital requirements through its ability to raise funds when required. The
current economic conditions continue to create uncertainty, particularly over (a) the level of demand for the Group’s
products; and (b) the availability of funding available for the foreseeable future. The Group’s forecasts and projections,
taking account of reasonably possible changes in trading performance, show that the Group should be able to operate
within the level of its current facilities.
After making enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue
in operational existence for the foreseeable future. The Group therefore continues to adopt the going concern basis in
preparing its consolidated Financial Statements.
FUTURE
DEVELOPMENTS
The Company intends to explore opportunities to manufacture or license out the underlying technology and the
Directors believe that in some instances, the patents owned by Inspirit may be also used in the development of products
other than a mCHP appliance. A prototype of the appliance has been independently tested and shown to be capable of
simultaneous generation of up to 15kW thermal and up to 3kW electrical output. Once development of the appliance
has been completed and commercialised, the Directors expect that the appliance will initially be marketed in the UK and
Europe and eventually worldwide. Additional revenue streams may be possible through product licensing, sales of
warranties and further development of the product.
On 1 July 2014, the Company concluded a more detailed manufacturing partnership agreement with Malvern Boilers
Ltd. The agreement will see the company and Malvern working closer together to achieve the joint goals of producing
the initial trial boilers for evaluation sites and placing Malvern in the controlling role of managing the production
introduction and supply chain.
On 18 September 2014, the Company agreed to issue 3,398,056 new ordinary shares of 0.1p each in the Company as
settlement for professional fees.
On 18 September 2014 the Company announced that Calor Gas Limited agreed to the installation of a mCHP boiler at
one of its customer sites.
On 27 October 2014 the Company announced it had reached the stage of finalising its commercial design and
committing to tooling with a number of its engineering partners and suppliers.
ON
BEHALF
OF
THE
BOARD
J Gunn
Director
5 December 2014
7
Inspirit Energy Holdings Plc
REPORT
OF
THE
DIRECTORS
FOR
THE
YEAR
ENDED
30
June
2014
The Directors present their annual report on the affairs of the Group, together with the audited financial statements
for the year ended 30 June 2014.
PRINCIPAL
ACTIVITIES
The principal activity of the Company is that of development and commercialisation of the mCHP boiler.
Details of the Group’s principal activities can be found in the Strategic Report.
DIRECTORS
The Directors who held office in the period up to the date of approval of the Financial Statements and their beneficial
interests in the Group’s issued share capital at the beginning and end of the accounting year were:
Number
of
ordinary
shares
Number
of
share
options
and
warrants
30
June
2014
6,000,000
30
June
2013
-
369,743,438
9,240,160
-
-
-
-
-
-
30
June
2014
-
-
-
-
-
30
June
2013
-
375,000
-
-
-
D Lenigas1
J Gunn
J Nazhat
N Jagatia
N Luke2
1Appointed 11 September 2013
2
Appointed 26 July 2013
INDEMNITY
OF
OFFICERS
The Company maintains appropriate insurance cover against legal action brought against its Directors and officers.
SUBSTANTIAL
INTERESTS
The Company is aware that at 5 November 2014, the following shareholdings in excess of 3% of the issued share
capital of the Company:
John Gunn
Rothschild Nominees Limited
Jim Nominees Limited
Number
of
ordinary
shares
Percentage
of
issued
share
capital
369,743,438
29,950,817
23,164,842
56.1%
4.5%
3.5%
POLICY
AND
PRACTICE
ON
PAYMENT
OF
CREDITORS
The Company’s policy is to agree terms of payment with suppliers. These normally provide for settlement within 30
days of the date of the invoice, except where other arrangements have been negotiated. It is the policy of the
Company to abide by the agreed terms of payment, provided the supplier performs according to the terms of the
contract.
8
Inspirit Energy Holdings Plc
REPORT
OF
THE
DIRECTORS
FOR
THE
YEAR
ENDED
30
June
2014
CORPORATE
GOVERNANCE
The Board has not adopted the UK Corporate Governance Code; this is only a requirement for premium listed
companies and the Board does not consider it appropriate for a company of the size and nature of Inspirit Energy
Holdings plc. The Board has, however, adopted the requirements of the Corporate Governance Guidelines for
Smaller Companies published by the Quoted Companies Alliance, although, until an independent non-executive
director is appointed, Neil Luke will chair each of the committees.
BOARD
OF
DIRECTORS
The Board is responsible for strategy and performance, approval of major capital projects and the framework of
internal controls. To enable the Board to discharge its duties, all Directors receive appropriate and timely
information. All Directors have access to the advice and services of the Company Secretary, who is responsible for
ensuring the Board procedures, are followed and that applicable rules and regulations are complied with.
AUDIT
COMMITTEE
The Audit Committee is currently chaired by Neil Luke and includes Jubeenh Nazhat and Nilesh Jagatia. The
committee provides a forum for reporting by the Group‟s external auditors. The committee is also responsible for
reviewing a wide range of matters, including half-year and annual results before their submission to the Board, and
for monitoring the controls that are in force to ensure the integrity of information reported to shareholders. The Audit
Committee will advise the Board on the appointment of external auditors and on their remuneration for both audit
and non-audit work, and will discuss the nature, scope and results of the audit with the external auditors. The
committee will keep under review the cost effectiveness and the independence and objectivity of the external
auditors.
The Audit Committee is responsible for ensuring the “right tone at the top” and that the ethical and compliance
commitments of management and employees are understood throughout the Group.
REMUNERATION
COMMITTEE
The Remuneration Committee is chaired by Neil Luke and includes Jubeenh Nazhat and Nilesh Jagatia. The
committee is responsible for making recommendations to the Board, within agreed terms of reference, on the
Group’s framework of executive remuneration and its cost. The Remuneration Committee determines the contract
terms, remuneration and other benefits for the executive directors, including performance related bonus schemes
and compensation payments. The Board itself determines the remuneration of the non-executive directors.
COMMUNICATIONS
WITH
SHAREHOLDERS
Communications with shareholders are given a high priority. In addition to the publication of an annual report and
an interim report, there is regular dialogue with shareholders and analysts. The Annual General Meeting is viewed
as a forum for communicating with shareholders, particularly private investors. Shareholders may question the
Executive Chairman and other members of the Board at the Annual General Meeting.
INTERNAL
CONTROL
The Directors acknowledge they are responsible for the Group's system of internal control and for reviewing the
effectiveness of these systems. The risk management process and systems of internal control are designed to
manage rather than eliminate the risk of the Group failing to achieve its strategic objectives. It should be recognised
that such systems can only provide reasonable and not absolute assurance against material misstatement or loss.
The Group has well established procedures which are considered adequate given the size of the business.
STATEMENT
OF
DIRECTORS'
RESPONSIBILITIES
The Directors are responsible for preparing the Annual Report of the Directors and the financial statements in
accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the
directors have prepared the group and parent company financial statements in accordance with International
Financial Reporting Standards (“IFRS”) as adopted by the European Union (“EU”). Under company law the
directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the
state of affairs of the Group and the Company and of the profit or loss of the Group for that period. In preparing
these financial statements, the directors are required to:
9
Inspirit Energy Holdings Plc
REPORT
OF
THE
DIRECTORS
FOR
THE
YEAR
ENDED
30
June
2014
•
select suitable accounting policies and then apply them consistently
• make judgments and accounting estimates that are reasonable and prudent
•
•
state whether applicable IFRSs as adopted by the European Union have been followed, subject to any material
departures disclosed and explained in the financial statements; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the
Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
company’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and
Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are
also responsible for safeguarding the assets of the group and company and hence for taking reasonable steps for
the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included
on the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of
financial statements may differ from legislation in other jurisdictions. The Company is compliant with AIM Rule 26
regarding the Company’s website.
DISCLOSURE
OF
INFORMATION
TO
AUDITOR
In the case of each person who was a Director at the time this report was approved:
•
•
so far as that director is aware there is no relevant audit information of which the Company’s auditor is
unaware: and
that director has taken all steps that the director ought to have taken as a director to make himself aware of
any relevant audit information and to establish that the Company’s auditor is aware of that information.
INDEPENDENT
AUDITOR
The auditor, PKF Littlejohn LLP, will be proposed for reappointment in accordance with section 485 of the
Companies Act 2006.
PKF Littlejohn LLP has signified its willingness to continue in office as auditor.
ON BEHALF OF THE BOARD
N Jagatia
Director
5 December 2014
10
Inspirit Energy Holdings Plc
INDEPENDENT
AUDITOR’S
REPORT
TO
THE
MEMBERS
OF
INSPIRIT
ENERGY
HOLDINGS
PLC
FOR
THE
YEAR
ENDED
30
June
2014
INDEPENDENT
AUDITOR’S
REPORT
TO
THE
MEMBERS
OF
INSPIRIT
ENERGY
HOLDING
PLC
We have audited the Financial Statements of Inspirit Energy Holdings Plc for the year ended 30 June 2014 which
comprise the Group and Parent Company Statements of Financial Position, the Group Statement of Comprehensive
Income, the Group and Parent Company Statement of Cash Flow, the Group and Parent Company Statements of
Changes in Equity and the related notes. The financial reporting framework that has been applied in their preparation is
applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as
regards the Parent Company Financial Statements, as applied in accordance with the provisions of the Companies Act
2006.
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those
matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted
by law, we do not accept or assume responsibility to anyone, other than the Company and the Company's members as
a body, for our audit work, for this report, or for the opinions we have formed.
RESPECTIVE
RESPONSIBILITIES
OF
DIRECTORS
AND
AUDITOR
As explained more fully in the Statement of Directors’ Responsibilities, the Directors are responsible for the preparation
of the Financial Statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and
express an opinion on the Financial Statements in accordance with applicable law and International Standards on
Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards
for Auditors.
SCOPE
OF
THE
AUDIT
OF
THE
FINANCIAL
STATEMENTS
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or
error. This includes an assessment of: whether the accounting policies are appropriate to the Company’s circumstances
and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates
made by Directors; and the overall presentation of the financial statements. In addition, we read all the financial and
non-financial information in the Annual Report to identify material inconsistencies with the audited financial statements
and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the
knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material
misstatements or inconsistencies we consider the implications for our report.
OPINION
ON
FINANCIAL
STATEMENTS
In our opinion:
•
•
•
•
the Financial Statements give a true and fair view of the state of the Group’s and of the Parent Company’s
affairs as at 30 June 2014 and of the Group’s loss for the year then ended;
the Group Financial Statements have been properly prepared in accordance with IFRSs as adopted by the
European Union;
the Parent Company Financial Statements have been properly prepared in accordance with IFRSs as adopted
by the European Union and as applied in accordance with the provisions of the Companies Act 2006; and
the Financial Statements have been prepared in accordance with the requirements of the Companies Act
2006.
EMPHASIS
OF
MATTER
–
GOING
CONCERN
In forming our opinion on the Financial Statements, which is not modified, we have considered the adequacy of the
disclosure made in note 2 to the Financial Statements concerning the Group’s and Company’s ability to continue as
going concerns. The Group and Company incurred a net loss of £1,293,000 and £646,000, respectively, during the
year ended 30 June 2014. These conditions, along with the other matters explained in note 2 to the Financial
Statements, indicate the existence of a material uncertainty which may cast significant doubt on the Group’s and
Company’s ability to continue as going concerns. The Financial Statements do not include the adjustments that would
result if the Group and Company were unable to continue as going concerns.
11
Inspirit Energy Holdings Plc
INDEPENDENT
AUDITOR’S
REPORT
TO
THE
MEMBERS
OF
INSPIRIT
ENERGY
HOLDINGS
PLC
FOR
THE
YEAR
ENDED
30
June
2014
OPINION
ON
OTHER
MATTER
PRESCRIBED
BY
THE
COMPANIES
ACT
2006
In our opinion the information given in the Strategic Report and Directors’ Report for the financial year for which the
Financial Statements are prepared is consistent with the Financial Statements.
MATTERS
ON
WHICH
WE
ARE
REQUIRED
TO
REPORT
BY
EXCEPTION
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to
you if, in our opinion:
•
adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit
have not been received from branches not visited by us; or
the Parent Company Financial Statements are not in agreement with the accounting records and returns; or
•
certain disclosures of Directors’ remuneration specified by law are not made; or
•
• we have not received all the information and explanations we require for our audit.
Mark Ling (Senior statutory auditor)
For and on behalf of PKF Littlejohn LLP
Statutory auditor
1 Westferry Circus
Canary Wharf
London E14 4HD
5 December 2014
12
Inspirit Energy Holdings Plc
GROUP
STATEMENT
OF
COMPREHENSIVE
INCOME
FOR
THE
YEAR
ENDED
30
June
2014
CONTINUING
OPERATIONS:
Revenue
Administrative expenses
Impairment of goodwill
Other losses – net
OPERATING
LOSS
Finance costs
LOSS
BEFORE
INCOME
TAX
Income tax credit
LOSS
FOR
THE
YEAR
(ATTRIBUTABLE
TO
OWNERS
OF
THE
PARENT)
Other comprehensive income
TOTAL
COMPREHENSIVE
INCOME
FOR
THE
YEAR
(ATTRIBUTABLE
TO
OWNERS
OF
THE
PARENT)
EARNINGS
PER
SHARE
- Basic and fully diluted earnings per share
(attributable to owners of the parent)
Note
2014
£’000
2013
£’000
8
13
9
10
11
-
(506)
(663)
(197)
(1,366)
(11)
(1,377)
84
(1,293)
-
(1,293)
-
(42)
-
-
(42)
(53)
(95)
17
(78)
-
(78)
12
(0.24p)
(0.02p)
The Company has elected to take the exemption under section 408 of the Companies Act 2006 not to present the
Parent Company Statement of Comprehensive Income.
The loss for the Parent Company for the year was £646,000 (2013: £448,000).
The accompanying accounting policies and notes are an integral part of these financial statements.
13
Inspirit Energy Holdings Plc
GROUP
STATEMENT
OF
CHANGES
IN
EQUITY
FOR
THE
YEAR
ENDED
30
June
2014
Attributable
to
the
owners
of
the
parent
Share
capital
£’000
15
Share
premium
£’000
737
Other
reserves
£’000
23
Merger
reserve
£’000
-
Reverse
acquisition
reserve
£’000
-
-
-
-
15
15
-
-
154
-
60
7
-
10
806
-
-
-
737
737
-
-
2,153
(53)
735
59
-
40
3,275
6,209
-
-
-
23
23
-
-
-
-
-
-
(23)
-
110
87
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,150
3,150
-
-
-
-
-
-
(7,361)
(7,361)
Retained
losses
£’000
(451)
(78)
(78)
-
(529)
Total
Equity
£’000
324
(78)
(78)
-
246
(529)
246
(1,293)
(1,293)
(1,293)
(1,293)
-
-
-
-
23
-
-
23
2,307
(53)
795
66
-
50
(20)
3,145
BALANCE
AT
1
July
2012
Loss for the year
TOTAL
COMPREHENSIVE
INCOME
FOR
THE
YEAR
TRANSACTIONS
WITH
OWNERS
BALANCE
AT
30
June
2013
BALANCE
AT
1
July
2013
Loss for the year
TOTAL
COMPREHENSIVE
INCOME
FOR
THE
YEAR
Shares issued
Share issue costs
Share based payments
Share warrants exercised
Cancellation of share warrants
Conversion of convertible loan
Reverse acquisition
TRANSACTIONS
WITH
OWNERS
1,037
BALANCE
AT
30
June
2014
1,052
6,946
110
3,150
(7,361)
(1,799)
2,098
The accompanying accounting policies and notes are an integral part of these financial statements.
14
Inspirit Energy Holdings Plc
COMPANY
STATEMENT
OF
CHANGES
IN
EQUITY
FOR
THE
YEAR
ENDED
30
June
2014
Attributable
to
equity
shareholders
Share
capital
£’000
Share
premium
£’000
Other
reserves
£’000
Retained
losses
£’000
460
3,888
105
(4,076)
-
-
8
1
2
11
471
-
471
-
-
92
18
14
124
4,012
-
-
-
-
19
(14)
5
110
-
(448)
(448)
-
-
-
-
(4,524)
(10)
4,012
110
(4,534)
471
4,012
110
(4,534)
-
-
350
154
-
60
7
10
581
-
-
3,150
2,153
(53)
735
59
40
6,084
-
-
-
-
-
-
-
-
-
(646)
(646)
-
-
-
-
-
-
-
Total
equity
£’000
377
(448)
(448)
100
38
2
140
69
(10)
59
59
(646)
(646)
3,500
2,307
(53)
795
66
50
6,665
BALANCE
AT
1
July
2012
Loss for the year
TOTAL
COMPREHENSIVE
INCOME
FOR
THE
YEAR
Shares issued
Share based payment
Conversion of convertible loan
TRANSACTIONS
WITH
OWNERS
BALANCE
AT
30
June
2013
(as
previously
reported)
Prior period adjustment
BALANCE
AT
30
June
2013
(restated)
BALANCE
AT
1
July
2013
Loss for the year
TOTAL
COMPREHENSIVE
INCOME
FOR
THE
YEAR
Reverse acquisition
Shares issued
Share issue costs
Share based payments
Share warrants exercised
Conversion of convertible loan
TRANSACTIONS
WITH
OWNERS
BALANCE
AT
30
June
2014
1,052
10,096
110
(5,180)
6,078
The accompanying accounting policies and notes are an integral part of these financial statements.
15
Inspirit Energy Holdings Plc
STATEMENT
OF
FINANCIAL
POSITION
FOR
THE
YEAR
ENDED
30
June
2014
Company Number: 05075088
GROUP
COMPANY
Note
13
14
15
16
18
17
18
19
20
21
21
23
23
23
24
25
24
NON-‐CURRENT
ASSETS
Intangible assets
Property, plant and equipment
Investments
Investment in subsidiaries
Trade and other receivables
CURRENT
ASSETS
Inventories
Trade and other receivables
Derivative financial instruments
Cash and cash equivalents
TOTAL
ASSETS
EQUITY
ATTRIBUTABLE
TO
OWNERS
OF
THE
PARENT
Share capital
Share premium
Other reserves
Merger reserve
Reverse acquisition reserve
Retained losses
TOTAL
EQUITY
NON-‐CURRENT
LIABILITIES
Trade and other payables
Borrowings
CURRENT
LIABILITIES
Trade and other payables
TOTAL
LIABILITIES
TOTAL
EQUITY
AND
LIABILITIES
2014
£’000
1,060
12
-
-
-
1,072
5
1,204
-
67
1,276
2,348
1,052
6,946
110
3,150
(7,361)
(1,799)
2,098
-
-
-
250
250
250
2,348
2013
£’000
769
6
-
-
-
775
5
31
-
1
37
812
15
737
23
-
-
(529)
246
-
-
-
566
566
566
812
2014
£’000
-
-
-
4,643
-
4,643
-
1,539
-
59
1,598
6,241
1,052
10,096
110
-
-
(5,180)
6,078
-
-
-
163
163
163
6,241
Restated
2013
£’000
-
-
740
-
115
855
-
35
-
-
35
890
471
4,012
110
-
-
(4,534)
59
411
52
463
368
831
831
890
These Financial Statements were approved by the Board of Directors on 5 December 2014 and were signed on its behalf
by:
N Jagatia
Director
The accompanying accounting policies and notes are an integral part of these financial statements.
16
Inspirit Energy Holdings Plc
STATEMENT
OF
CASH
FLOWS
FOR
THE
YEAR
ENDED
30
June
2014
GROUP
COMPANY
Note
2014
£’000
2013
£’000
2014
£’000
CASH
FLOWS
FROM
OPERATING
ACTIVITIES
Loss before tax
Depreciation
Finance income
Finance expense
Share based payment expense
Share warrants exercised
Impairment of goodwill
Decrease/(increase) in trade and other receivables
(Increase)/decrease in trade and other payables
CASH
(USED
BY)/GENERATED
FROM
OPERATING
ACTIVITIES
Interest paid
Income tax credit received
NET
CASH
(USED
BY)/GENERATED
FROM
OPERATING
ACTIVITIES
CASH
FLOWS
FROM
INVESTING
ACTIVITIES
Payments to acquire intangible assets
Payments to acquire property, plant and equipment
NET
CASH
FROM
INVESTING
ACTIVITIES
CASH
FLOWS
FROM
FINANCING
ACTIVTIES
Net proceeds from issue of share capital
Loan to group undertaking
Interest received
NET
CASH
FROM
FINANCING
ACTIVITIES
NET
(DECREASE)/INCREASE
IN
CASH
AND
CASH
EQUIVALENTS
Cash and cash equivalents at the beginning of the
year
CASH
AND
CASH
EQUIVALENTS
AT
THE
END
OF
THE
20
YEAR
2013
£’000
(448)
-
(4)
31
-
-
-
(107)
428
(646)
-
-
6
795
66
-
(364)
(260)
(403)
(100)
(6)
-
-
-
(1,377)
1
-
11
795
66
663
80
(652)
(413)
(11)
17
(95)
1
-
53
-
-
-
(58)
124
25
(48)
100
(407)
77
(409)
(100)
(291)
(7)
(298)
(126)
-
(126)
771
-
-
771
66
1
67
-
-
-
-
(49)
50
1
-
-
-
871
(403)
-
468
59
-
59
-
-
-
100
-
-
100
-
-
-
The accompanying accounting policies and notes are an integral part of these financial statements.
17
Inspirit Energy Holdings Plc
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR
THE
YEAR
ENDED
30
June
2014
1
GENERAL
INFORMATION
The principal activity of Inspirit Energy Holdings Plc during the period was that of developing and
commercialising the mCHP boiler.
On 25 July 2013 the Company completed the acquisition of Inspirit Energy Limited, and now owns all of that
company’s issued share capital. These financial statements show the consolidated results of the Group for
the year ended 30 June 2014; the comparative results (30 June 2013) are presented for the Company only.
Inspirit Energy Holdings Plc is a company incorporated and domiciled in England and Wales and quoted on
the Alternative Investment Market of the London Stock Exchange. The address of its registered office is 2nd
Floor, 2 London Wall Buildings, London, EC2M 5PP, United Kingdom. On 25 July 2013 the Company
changed its name from KleenAir Systems International Plc to Inspirit Energy Holdings Plc.
2
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
The principal accounting policies adopted in the preparation of these financial statements are set out below.
These policies have been consistently applied to all the periods presented, unless otherwise stated.
BASIS
OF
PREPARATION
The consolidated Financial Statements of Inspirit Energy Holdings Plc have been prepared in accordance
with International Financial Reporting Standards (IFRS) and IFRS Interpretations Committee (IFRS IC) as
adopted by the European Union and the parts of Companies Act 2006 applicable to companies reporting
under IFRS.
The consolidated Financial Statements have been prepared under the historical cost convention, as
modified by financial assets (including derivative instruments) at fair value through the profit or loss.
The preparation of Financial Statements in conformity with IFRS requires the use of certain critical
accounting estimates. It also requires management to exercise its judgement in the process of applying the
Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas
where assumptions and estimates are significant to the consolidated Financial Statements are disclosed in
Note 4.
GOING
CONCERN
The Group’s activities, together with the factors likely to affect its future development, performance and
position, are set out in the Strategic Report on pages 4 to 6. It also includes the Group’s objectives, policies
and processes for managing its business risk objectives, which includes its exposure to technology,
customer and other operational risks.
The Directors have prepared cash flow forecasts for the Group and Company which reflect the Group’s and
Company’s forecast cash inflows and costs.
On 26 June 2014 the Company raised £1m in equity. The cash flow forecasts for the Group and Company
show that further equity and/or borrowings will be required to complete the development and testing of the
Group’s mCHP boiler and bring it into production. Although the Directors are confident that further equity can
be raised at a valuation acceptable to the Company there is no guarantee this will be the case. In the event
that further equity cannot be raised or insufficient equity is raised the Company has the benefit of a standby
loan agreement with John Gunn and David Lenigas who have undertaken to provide loans of up to £600,000
over the next 12 months, as the Company may reasonably require.
18
Inspirit Energy Holdings Plc
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR
THE
YEAR
ENDED
30
June
2014
2
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(continued)
GOING
CONCERN
(continued)
It is envisaged by the Directors that existing cash resources together with these forecast cash inflows will
provide adequate funds for Inspirit Energy Holdings Plc and its subsidiary undertakings for the foreseeable
future. The Directors have formed a judgement, at the time of approving the financial statements, that there
is a reasonable expectation that the Group and Company has adequate resources to continue in operational
existence for the foreseeable future. For this reason the Directors continue to adopt the going concern basis
in preparing the financial statements.
PRIOR
PERIOD
ADJUSTMENT
The Company omitted a transaction in the year ended 30 June 2013 that has resulted in a prior period
restatement in the opening profit and loss account for 30 June 2014, resulting in an increase to retained
losses brought forward and an increase to liabilities.
The impact of the prior period error has been retrospectively applied in accordance with IAS 8 ‘Accounting
Policies, Changes in Accounting Estimates and Errors’.
Consultancy expenses that were paid for by Inspirit Energy Limited for and on behalf of the Company were
not recognised as an additional liability as at 30 June 2013. As a result of the prior period error, the following
adjustments were made to the financial statements:
As of 1 July 2013
Net increase in retained losses brought forward
Net increase in liabilities
BASIS
OF
CONSOLIDATION
2013
£
(10,000)
10,000
Inspirit Energy Holdings Plc, the legal parent, is domiciled and incorporated in the United Kingdom.
The Group Financial Statements consolidate the Financial Statements of Inspirit Energy Holdings Plc and
Inspirit Energy Limited made up to 30 June 2014.
Subsidiaries are entities over which the Group has control. Control is the power to govern the financial and
operating policies of an entity so as to obtain benefits from its activities. The Group obtains and exercises
control through voting rights. The existence and effect of potential voting rights that are currently exercisable
or convertible are considered when assessing whether the company controls another entity.
The Company acquired Inspirit Energy Limited on 25 July 2013 through a share exchange. As the
shareholders of Inspirit Energy Limited have control of the legal parent, Inspirit Energy Holdings Plc, the
transaction has been accounted for as a reverse acquisition in accordance with IFRS 3 “Business
Combinations”. Consequently, although the Financial Statements are prepared in the name of the legal
parent, they are in substance a continuation of those of the legal subsidiary. The following accounting
treatment has been applied in respect of the reverse acquisition:
•
•
•
the assets and liabilities of the legal subsidiaries within Inspirit Energy Limited are recognised and
measured in the consolidated financial statements at their pre-combination carrying amounts, without
restatement to fair value;
the equity structure appearing in the consolidated financial statements reflects the equity structure of
the legal parent, Inspirit Energy Holdings Plc, including the equity instruments issued to effect the
business combination;
comparative numbers presented in the consolidated financial statements are those reported in the
financial statements of the legal subsidiaries consolidated within Inspirit Energy Limited.
The cost of acquisition is measured as the fair value of the assets acquired, equity instruments issued and
liabilities incurred or assumed at the date of exchange. Acquisition related costs are expensed as incurred.
Intercompany transactions, balances and unrealised gains on transactions between Group companies are
eliminated.
19
Inspirit Energy Holdings Plc
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR
THE
YEAR
ENDED
30
June
2014
2
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(continued)
NEW
AND
AMENDED
STANDARDS
ADOPTED
BY
THE
GROUP
a)
New and amended standards adopted by the Group:
The following standards and amendments to existing standards and interpretations and are mandatory for
the annual period beginning after 1 July 2013 and have been applied in preparing these financial
statements:
Amendment to IAS 1, ‘Presentation of Financial Statement’ regarding other comprehensive income
became effective during the period. Items in the consolidated statement of comprehensive income that
may be reclassified to profit or loss in subsequently periods are now presented separately from items that
will not be reclassified to profit or loss in subsequent periods.
IFRS 13, “Fair value measurement” became effective during the period. The standard requires specific
disclosures on fair values, some of which replace existing disclosure requirements in IFRS 7, “Financial
instruments: Disclosures”. The fair values of cash and cash equivalents, trade and other receivables and
trade and other payables approximate to their book values due to the short maturity periods of these
financial instruments. Available for sale financial assets consist of equity investments whose fair value is
determined by reference to inputs other than quoted market prices (level 2 in the fair value measurement
hierarchy).
b)
New and amended standards, and interpretations mandatory for the first time for the financial year
beginning 1 July 2013, but not currently relevant to the Group:
A number of new standards and amendments to standards and interpretations are effective for annual
periods beginning after 1 July 2013, and have not been applied in preparing these Financial Statements.
None of these are expected to have a significant effect on the financial statements of the Group.
IAS 19, ‘Employee benefits’ eliminate the option to defer the recognition of gains and losses, known as the
“corridor method”; streamline the presentation of changes in assets and liabilities arising from defined
benefit plans.
IFRS 7, ‘Financial Instruments: Disclosures’ was amended for asset and liability offsetting. This
amendment requires disclosure of information that will enable users of financial statements to evaluate the
effect or potential effect of netting arrangements, including rights of set-off associated with the entity’s
recognised financial assets and recognised financial liabilities, on the entity’s financial position.
Amendment to IFRS 1, ‘First-time Adoption of International Financial Reporting Standards’ on government
loans, addresses how first-time adopters would account for a government loan with a below-market rate of
interest when transitioning to IFRS.
IFRIC 20, ‘Stripping Costs in the Production Phase of a Surface Mine’, clarifies when production stripping
should lead to the recognition of an asset and how that asset should be measured, both initially and in
subsequent periods.
‘Annual Improvements 2009 – 2011 Cycle’ sets out amendments to various IFRSs as follows:
• An amendment to IFRS 1, ‘First-time Adoption’ clarifies whether an entity may apply IFRS 1:
(a) if the entity meets the criteria for applying IFRS 1 and has applied IFRS 1 in a previous
reporting period; or
(b) if the entity meets the criteria for applying IFRS 1 and has applied IFRSs in a previous
reporting period when IFRS 1 did not exist.
•
The amendment to IFRS 1 also addresses the transitional provisions for borrowing costs relating
to qualifying assets for which the commencement date for capitalization was before the date of
transition to IFRSs.
• An amendment to IAS 1, ‘Presentation of Financial Statements’ clarifies the requirements for
providing comparative information when an entity provides Financial Statements beyond the
minimum comparative information requirements.
20
Inspirit Energy Holdings Plc
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR
THE
YEAR
ENDED
30
June
2014
2
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(continued)
NEW
AND
AMENDED
STANDARDS
ADOPTED
BY
THE
GROUP
(continued)
• An amendment to IAS 16, ‘Property, Plant and Equipment’ addresses a perceived inconsistency in
the classification requirements for servicing equipment.
IAS 32,
‘Financial
• An amendment
to
Instruments: Presentation’ addresses perceived
inconsistencies between IAS 12, ‘Income Taxes’ and IAS 32 with regard to recognizing the
consequences of income tax relating to distributions to holders of an equity instrument and to
transaction costs of an equity transaction.
• An amendment to IAS 34, ‘Interim Financial Reporting’ clarifies the requirements on segment
information for total assets and liabilities for each reportable segment.
c)
New and amended standards and interpretations issued but not yet effective for the financial year
beginning 1 July 2013 and not early adopted
The standards and interpretations that are issued, but not yet effective, up to the date of issuance of the
financial statements are disclosed below. The Group intend to adopt these standards, if applicable, when
they become effective.
Amendments to IAS 16 “Property, Plant and Equipment” and IAS 38 “Intangible Assets”: Clarification of
Acceptable Methods of Depreciation and Amortisation. The amendments clarify that a deprecation method
which is based on revenue that is generated by an activity which includes the use of an asset is not
appropriate for property, plant and equipment. The amendments also introduce a rebuttable presumption
that an amortisation method that is based on the revenue generated by an activity that includes the use of
an intangible asset is inappropriate, which can only be overcome in limited circumstances. The Group has
yet to assess the amendments full impact but intends to adopt no later than accounting period beginning on
or after 1 January 2016, subject to EU endorsement.
Amendments to IAS 16 “Property, Plant and Equipment” and IAS 41 “Agriculture”: Bearer Plants. The
amendments include ‘bearer plants’ within the scope of IAS 16 instead of IAS 41, allowing such assets to
be accounted for as property, plant and equipment and measured after initial recognition on a cost or
revaluation basis in accordance with IAS 16. The amendments also introduce a definition of ‘bearer plants’
as a living plant that is used in the production or supply of agricultural produce, is expected to bear produce
for more than one period and has a remote likelihood of being sold as agricultural produce, except for
incidental scrap sales. The amendments also clarify that produce growing on bearer plants remains within
the scope of IAS 41. The Group has yet to assess the amendments full impact but intends to adopt no later
than accounting periods beginning on or after 1 January 2016, subject to EU endorsement.
Amendment to IAS 19, ‘Defined Benefit Plans: Employee Contributions’, provides guidance added to IAS
19 Employee Benefits on accounting for contributions from employees or third parties set out in the formal
terms of a defined benefit plan. The Directors do not believe that this will have an impact on the Group
however will be adopted no later than accounting period beginning on or after 1 July 2014, subject to
endorsement by the EU.
IAS 27, ‘Separate Financial Statements’, replaces the current version of IAS 27, ‘Consolidated and
Separate Financial Statements’ as a result of the issue of IFRS 10. The revised standard includes the
requirements relating to separate financial statements. The revised standard becomes effective for
accounting periods beginning on or after 1 January 2014.
Amendments to IAS 27 “Separate Financial Statements”: Equity Method in Separate Financial Statements.
The amendments to IAS 27 permit investments in subsidiaries, joint ventures and associates to be
optionally accounted for using the equity method in the separate financial statements. The Group has yet to
assess the amendments full impact but intends to adopt no later than accounting periods beginning on or
after 1 January 2016, subject to EU endorsement.
21
Inspirit Energy Holdings Plc
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR
THE
YEAR
ENDED
30
June
2014
2
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(continued)
NEW
AND
AMENDED
STANDARDS
ADOPTED
BY
THE
GROUP
(continued)
IAS 28, ‘Investments in Associates and Joint Ventures’, replaces the current version of IAS 28,’Investments
in Associates’, as a result of the issue of IFRS 11. The revised standard includes the requirements for
associates and joint ventures that have to be equity accounted following the issue of IFRS 1. The Group is
yet to assess full impact of the revised standard and intends to adopt IAS 28 (revised) no later than the
accounting period beginning on or after 1 January 2014.
Amendment to IAS 32, ‘Financial Instruments Presentation’, adds application guidance to address
inconsistencies identified in applying some of the criteria when offsetting financial assets and financial
liabilities. This includes clarifying the meaning of “currently has a legally enforceable right of set-off” and
that some gross settlement systems may be considered equivalent to net settlement. The Group is yet to
assess the full impact of the amendment to IAS 32 and intends to adopt the amended standard no later
than the accounting period beginning on or after 1 January 2014.
Amendment to IAS 36, ‘Impairment of Assets’, to reduce the circumstances in which the recoverable
amount of assets or cash-generating units is required to be disclosed, clarify the disclosures required, and
to introduce an explicit requirement to disclose the discount rate used in determining impairment (or
reversals) where recoverable amount (based on fair value less costs of disposal) is determined using a
present value technique. The Group is yet to assess full impact of the revised standard and intends to
adopt the amendment to IAS 36 no later than the accounting period beginning on or after 1 January 2014.
Amendment to IAS 39, ‘Financial Instruments: Novation of Derivatives and Continuation of Hedge
Accounting’, make it clear that there is no need to discontinue hedge accounting if a hedging derivative is
novated, provided certain criteria are met. The Group is yet to assess full impact and intends to adopt the
amendment to IAS 39 no later than the accounting period beginning on or after 1 January 2014.
IFRS 9 (2014) “Financial Instruments” supersedes IFRS 9 (2009), IFRS 9 (2010) and IFRS 9 (2013). The
finalised version of IFRS 9 contains accounting requirements for financial instruments, replacing IAS 39
“Financial Instruments: Recognition and Measurement”. The content of IFRS 9 (2014) includes:
• Classification and measurement – financial assets are classified by reference to the business
model within which they are held and their contractual cash flow characteristics. The standard
introduces a fair value through other comprehensive income category for certain debt instruments.
Financial liabilities are classified in a similar manner to that under IAS 39 however there are
differences in the requirements applying to the measurement of an entity’s own risk.
Impairment – The standard introduces an expected credit loss model for the measurement of the
impairment of financial assets. so it is no longer necessary for a credit event to have occurred
before a credit loss is recognised
•
• Hedge accounting – The standard introduces a new hedge accounting model that is designed to be
more closely aligned with how entities undertake risk management activities when hedging
financial and non-financial risk exposures.
• Derecognition – the requirements for the derecognition of financial assets and liabilities are carried
forward from IAS 39.
The Group is yet to assess IFRS 9’s full impact and intends to adopt IFRS 9 no later than the accounting
period beginning on or after 1 January 2018, subject to EU endorsement.
IFRS 10, ‘Consolidated financial statements’, builds on existing principles by identifying the concept of
control as the determining factor in whether an entity should be included within the consolidated financial
statements of the parent company. The standard provides additional guidance to assist in the
determination of control where this is difficult to assess. The Group is yet to assess IFRS 10’s full impact
and intends to adopt IFRS 10 no later than the accounting period beginning on or after 1 January 2014.
22
Inspirit Energy Holdings Plc
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR
THE
YEAR
ENDED
30
June
2014
2
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(continued)
NEW
AND
AMENDED
STANDARDS
ADOPTED
BY
THE
GROUP
(continued)
Amendments to IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and
Joint Ventures (2011) in order to clarify the treatment of the sale or contribution of assets from an investor
to its associate or joint venture, as follows:
•
•
require full recognition in the investor's financial statements of gains and losses arising on the sale
or contribution of assets that constitute a business (as defined in IFRS 3 Business Combinations)
require the partial recognition of gains and losses where the assets do not constitute a business,
i.e. a gain or loss is recognised only to the extent of the unrelated investors’ interests in that
associate or joint venture.
These requirements apply regardless of the legal form of the transaction, e.g. whether the sale or
contribution of assets occurs by an investor transferring shares in an subsidiary that holds the assets
(resulting in loss of control of the subsidiary), or by the direct sale of the assets themselves. The Group
has yet to assess the amendments full impact but intends to adopt no later than accounting periods
beginning on or after 1 January 2016, subject to EU endorsement.
IFRS 11, ’Joint Arrangements’ provides for a more realistic reflection of joint arrangements by focusing on
the rights and obligations of the arrangement, rather than its legal form. There are two types of joint
arrangement; joint operations and joint ventures. Joint operations arise where a joint operator has rights to
the assets and obligations relating to the arrangement and therefore accounts for its share of assets,
liabilities, revenue and expenses. Joint ventures arise where the joint venture has rights to the net assets of
the arrangement and therefore equity accounts for its interest. Proportional consolidation of joint ventures is
no longer allowed. The Group is yet to assess IFRS 11’s full impact and intends to adopt IFRS 11 no later
than the accounting period beginning on or after 1 January 2014.
Amendments to IFRS 11 “Joint Arrangements: Accounting for Acquisitions of Interests in Joint Operations”
require an acquirer of an interest in a joint operation in which the activity constitutes a business as defined
in IFRS 3. The amendments apply both to the initial acquisition of an interest in a joint operation, and the
acquisition of an additional interest in a joint operation. The Group has yet to assess the full impact of this
amendment and intends to adopt no later than accounting period beginning on or after 1 January 2016,
subject to EU endorsement.
IFRS 12, ‘Disclosures of interests in other entities’, includes the disclosure requirements for all forms of
interests in entities, including joint arrangements, associates, special purpose vehicles and other off
Statement of Financial Position vehicles. The Group is yet to assess IFRS 12’s full impact and intends to
adopt IFRS 12 no later than the accounting period beginning on or after 1 January 2014.
Amendments to IFRS 10 “Consolidated Financial Statements”, IFRS 11 “Joint Arrangements” and IFRS 12
“Disclosure of Interests in Other Entities” clarify the IASB’s intention when first issuing the transition
guidance in IFRS 10, provide similar relief in IFRS 11 and IFRS 12 from the presentation or adjustment of
comparative information for periods prior to the immediately preceding period, and provide additional
transition relief by eliminating the requirement to present comparatives for the disclosures relating to
unconsolidated structured entities for any period before the first annual period for which IFRS 12 is applied.
The Group plans to adopt these amendments no later than the annual period beginning on or after 1
January 2014.
Amendments to IFRS 10, ‘Consolidated Financial Statements’, IFRS 12, ‘Disclosure of Interests in Other
Entities’ and IAS 27, ‘Separate Financial Statements’, provide ‘investment entities’ (as defined) an
exemption from the consolidation of particular subsidiaries and instead require that an investment entity
measure the investment in each eligible subsidiary at fair value through profit or loss in accordance with
IFRS 9 Financial Instruments or IAS 39 Financial Instruments: Recognition and Measurement. The Group
is yet to assess the full impact of these amendments and intends to adopt the amended standards no later
than the accounting period beginning on or after 1 January 2014.
23
Inspirit Energy Holdings Plc
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR
THE
YEAR
ENDED
30
June
2014
2
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(continued)
NEW
AND
AMENDED
STANDARDS
ADOPTED
BY
THE
GROUP
(continued)
IFRS 14 “Regulatory Deferral Accounts” permits an entity which is a first time adopter of International
Financial Reporting Standards to continue to account, with some limited changes for ‘regulatory deferral
account balances’ in accordance with its previous GAAP, both on initial adoption of IFRS and in
subsequent financial statements. The Group is yet to assess the full impact of this amendment and intends
to adopt no later than the accounting period beginning on or after 1 January 2016, subject to EU
endorsement.
IFRS 15 “Revenue from Contracts with Customers” provides a single, principles based five-step model to
be applied to all contracts with customers. The standard includes guidance on the point in which revenue is
recognised, accounting for variable consideration, costs of fulfilling and obtaining a contract and various
related matters. IFRS 15 also introduces new disclosures about revenue. The Group is yet to assess the
full impact of this amendment and intends to adopt no later than the accounting period beginning on or after
1 January 2017, subject to EU endorsement.
IFRIC 21, ‘Levies’, provides guidance on when to recognise a liability for a levy imposed by a government,
both for levies that are accounted for in accordance with IAS 37 Provisions, Contingent Liabilities and
Contingent Assets. The Group is yet to assess the full impact and intends to adopt the standard no later
than the accounting period beginning on or after 1 January 2014.
“Annual Improvements 2010 – 2012 Cycle” sets out amendments to various IFRSs and provides a vehicle
for making non-urgent but necessary amendments to IFRSs:
•
•
•
•
•
•
•
IFRS 2 “Share-based Payment”: amendment to the definition of a vesting condition.
IFRS 3 “Business Combinations”: amendments to the accounting for contingent consideration in a
business combination.
IFRS 8 “Operating Segments”: aments to the aggregation of operating segments and the
reconciliation of the total of the reportable segments’ assets to the entity’s assets.
IFRS 13 “Fair Value Measurement”: amendments to short-term receivables and payables.
IAS 16 “Property, Plant and Equipment”: amendments to the revaluation method in relation to the
proportionate restatement of accumulated depreciation.
IAS 24 “Related Party Disclosures”: amendments regarding key management personnel.
IAS 38 “Intangible Assets”: amendments to the revaluation method in relation to the proportionate
restatement of accumulated depreciation.
The Group intends to adopt the amended standards no later than the annual period beginning on or after 1
July 2014, subject to EU endorsement.
Annual Improvements 2011 – 2013 Cycle” sets out amendments to various IFRSs and provides a vehicle
for making non-urgent but necessary amendments to IFRSs:
•
•
•
•
IFRS 1 “First-time Adoption of International Financial Reporting Standards”: amendment to the
meaning of ‘effective IFRSs’.
IFRS 3 “Business Combinations”: amendments to the scope exceptions for joint ventures.
IFRS 13 “Fair Value Measurement”: amendments to the scope of paragraph 52 (portfolio
exception).
IAS 40 “Investment Property”: amendments clarifying the interrelationship between IFRS 3 and
IAS 40 when classifying property as investment property or owner-occupied property.
The Group intends to adopt the amended standards no later than the accounting period beginning on or
after 1 July 2014, subject to EU endorsement.
24
Inspirit Energy Holdings Plc
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR
THE
YEAR
ENDED
30
June
2014
2
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(continued)
NEW
AND
AMENDED
STANDARDS
ADOPTED
BY
THE
GROUP
(continued)
Annual Improvements 2011 – 2013 Cycle” sets out additional amendments to the following IFRSs:
•
•
•
•
IFRS 5 — Adds specific guidance in IFRS 5 for cases in which an entity reclassifies an asset from
held for sale to held for distribution or vice versa and cases in which held-for-distribution
accounting is discontinued
IFRS 7 — Additional guidance to clarify whether a servicing contract is continuing involvement in a
transferred asset, and clarification on offsetting disclosures in condensed interim financial
statements
IAS 9 — Clarify that the high quality corporate bonds used in estimating the discount rate for post-
employment benefits should be denominated in the same currency as the benefits to be paid
IAS 34 — Clarify the meaning of 'elsewhere in the interim report' and require a cross-reference
The Group intends to adopt the amended standards no later than the annual periods beginning on or after
1 July 2016, subject to EU endorsement.
SEGMENTAL
REPORTING
The accounting policy for identifying segments is now based on internal management reporting information
that is regularly reviewed by the chief operating decision maker, which is identified as the Board of Directors.
In identifying its operating segments, management generally follows the Group's service lines which
represent the main products and services provided by the Group. The Directors believe that the Group’s
continuing investment operations comprise one segment.
FOREIGN
CURRENCY
TRANSLATION
a)
FUNCTIONAL AND PRESENTATION CURRENCY
Items included in the Financial Statements of each of the Group’s entities are measured using the currency
of the primary economic environment in which the entity operates (“functional currency”).
The consolidated Financial Statements are presented in Pounds Sterling (£), which is the Company’s
functional and the Group’s presentation currency.
b)
TRANSACTIONS AND BALANCES
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing
at the dates of the transactions, or valuation where items are remeasured. Foreign exchange gains and
losses resulting from the settlement of such transactions, and from the translation at year-end exchange
rates of monetary assets and liabilities denominated in foreign currencies, are recognised the Statement of
Comprehensive Income.
Foreign exchange gains and losses relating to borrowings and cash and cash equivalents are presented in
the Statement of Comprehensive Income within “Finance Income” or “Finance Costs”. All other foreign
exchange gains and losses are presented in the Statement of Comprehensive Income within “Other
(Losses)/Gains – Net”.
25
Inspirit Energy Holdings Plc
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR
THE
YEAR
ENDED
30
June
2014
2
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(continued)
PROPERTY,
PLANT
AND
EQUIPMENT
Property, plant and equipment are stated at historical cost less depreciation. Historical cost includes
expenditure that is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will flow to the
Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is
derecognised. All other repairs and maintenance are charged to the Statement of Comprehensive Income
during the financial period in which they are incurred.
Depreciation is calculated to allocate the cost of each class of asset to their residual values over their
estimated useful lives, as follows:
• Plant and Equipment – 15% reducing balance
Fixtures and Fittings – 20% reducing balance
•
• Motor Vehicles – 5 years, straight line
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each
reporting period.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying
amount is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount, and are
recognised within “Other (Losses)/Gains – Net” in the Statement of Comprehensive Income.
INTANGIBLE
ASSETS
a)
GOODWILL
Goodwill arises on the acquisition of subsidiaries, associates and joint ventures and represents the excess of
the consideration transferred over the Company’s interest in the net fair value of the net identifiable assets,
liabilities and contingent liabilities of the acquiree and the fair value of the non-controlling interest in the
acquiree.
For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of
the cash-generating units, or groups of cash-generating units, that are expected to benefit from the synergies
of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level
within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored
at the operating segment level.
Goodwill impairment reviews are undertaken annually, or more frequently, if events or changes in
circumstances indicate a potential impairment. The carrying value of goodwill is compared to the
recoverable amount, which is the higher of value in use and the fair value less costs to sell. Any impairment
is recognised immediately as an expense and is not subsequently reversed.
b)
DEVELOPMENT COSTS
Development costs relate to expenditure on the development of certain new products and service projects
where the outcome of those projects is assessed as being reasonably certain as regards viability and
technical feasibility. Such expenditure is capitalised and amortised over the expected sales life of the
product, being generally a period not longer than five years commencing in the year the sales of the product
were first made.
26
Inspirit Energy Holdings Plc
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR
THE
YEAR
ENDED
30
June
2014
2
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(continued)
INTANGIBLE
ASSETS
(continued)
Development costs incurred on specific projects are capitalised when all the following conditions are
satisfied:
•
•
•
•
•
•
completion of the intangible asset is technically feasible so that it will be available for use or sale
the Group intends to complete the intangible asset and use or sell it
the Group has the ability to use or sell the intangible asset
the intangible asset will generate probable future economic benefits
there are adequate technical, financial and other resources to complete the development and to use
or sell the intangible asset, and
the expenditure attributable to the intangible asset during its development can be measured
reliably.
Directly attributable costs that are capitalised as part of the software product include the software
development employee costs and an appropriate portion of relevant overheads.
Other development expenditure that does not meet these criteria is recognised as an expense as incurred.
Development costs previously recognised as an expense are not recognised as an asset in a subsequent
period.
IMPAIRMENT
OF
NON-‐FINANCIAL
ASSETS
Assets that have an indefinite useful life, for example goodwill, are not subject to amortisation and are tested
annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount may not be recoverable. An
impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use.
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are
separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that
suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.
FINANCIAL
ASSETS
a)
CLASSIFICATION
The Group classifies its financial assets in the following categories: at fair value through profit or loss and
loans and receivables. The classification depends on the purpose for which the financial assets were
acquired. Management determines the classification of its financial assets at initial recognition.
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
Financial assets at fair value or loss are financial assets held for trading. A financial asset is classified in this
category if acquired principally for the purpose of selling in the short term. Derivatives are also categorised
as held for trading unless they are designated as hedges.
Assets in this category are classified as current assets if expected to be settled within 12 months; otherwise,
they are classified as non-current.
LOANS AND RECEIVABLES
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market. They are included in current assets, except for maturities greater than 12 months
after the Statement of Financial Position date. These are classified as non-current assets. The Group’s loans
and receivables comprise trade and other receivables and cash and cash equivalents in the Statement of
Financial Position.
27
Inspirit Energy Holdings Plc
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR
THE
YEAR
ENDED
30
June
2014
2
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(continued)
FINANCIAL
ASSET
(continued)
b)
RECOGNITION AND MEASUREMENT
Regular purchases and sales of financial assets are recognised on the trade date – the date on which the
Group commits to purchasing or selling the asset. Financial assets carried at fair value through profit or loss
is initially recognised at fair value, and transaction costs are expensed in the Statement of Comprehensive
Income. Financial assets are derecognised when the rights to receive cash flows from the assets have
expired or have been transferred, and the Group has transferred substantially all of the risks and rewards of
ownership.
Financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and
receivables are subsequently carried at amortised cost using the effective interest method.
Gains or losses arising from changes in the fair value of financial assets at fair value through profit or loss
are presented in the Statement of Comprehensive Income within “Other (Losses)/Gains – Net” in the period
in which they arise.
IMPAIRMENT
OF
FINANCIAL
ASSETS
The Group assesses at the end of each reporting period whether there is objective evidence that a financial
asset, or a group of financial assets, is impaired. A financial asset, or a group of financial assets, is impaired,
and impairment losses are incurred, only if there is objective evidence of impairment as a result of one or
more events that occurred after the initial recognition of the asset (a “loss event”), and that loss event (or
events) has an impact on the estimated future cash flows of the financial asset, or group of financial assets,
that can be reliably estimated.
The criteria that the Group uses to determine that there is objective evidence of an impairment loss include:
•
•
•
•
•
significant financial difficulty of the issuer or obligor;
a breach of contract, such as a default or delinquency in interest or principal repayments;
the disappearance of an active market for that financial asset because of financial difficulties;
observable data indicating that there is a measurable decrease in the estimated future cash flows
from a portfolio of financial assets since the initial recognition of those assets, although the
decrease cannot yet be identified with the individual financial assets in the portfolio; or
for assets classified as available-for-sale, a significant or prolonged decline in the fair value of the
security below its cost.
a)
ASSETS CARRIED AT AMORTISED COST
The amount of impairment is measured as the difference between the asset’s carrying amount and the
present value of estimated future cash flows (excluding future credit losses that have not been incurred),
discounted at the financial asset’s original effective interest rate. The asset’s carrying amount is reduced,
and the loss is recognised in the Statement of Comprehensive Income. As a practical expedient, the Group
may measure impairment on the basis of an instrument’s fair value using an observable market price.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related
objectively to an event occurring after the impairment was recognised (such as an improvement in the
debtor’s credit rating), the reversal of the previously recognised impairment loss is recognised in the
Statement of Comprehensive Income.
INVENTORIES
Inventories are stated at the lower of cost and net realisable value. The cost of finished goods and work in
progress comprises raw materials, direct labour, other direct costs and related production overheads (based
on normal operating capacity). Net realisable value is the estimated selling price in the ordinary course of
business, less applicable variable selling expenses.
28
Inspirit Energy Holdings Plc
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR
THE
YEAR
ENDED
30
June
2014
2
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(continued)
DERIVATIVE
FINANCIAL
INSTRUMENTS
Derivatives are initially recognised at fair value on the date a derivative contract is entered into, and are
subsequently remeasured at their fair value.
TRADE
AND
OTHER
RECEIVABLES
Trade receivables are amounts due from customers for merchandise sold or services performed in the
ordinary course of business. If collection is expected in one year or less (or in the normal operating cycle of
the business if longer), they are classified as current assets. If not they are presented as non-current assets.
Trade receivables are recognised initially at fair value, and subsequently measured at amortised cost using
the effective interest method, less provision for impairment.
CASH
AND
CASH
EQUIVALENTS
In the consolidated Statement of Cash Flows, cash and cash equivalents comprise cash in hand and
deposits held at call with banks.
SHARE
CAPITAL
Equity comprises the following:
•
•
•
•
“Share capital” represents the nominal value of equity shares.
“Share premium” represents the excess over nominal value of the fair value of consideration
received for equity shares, net of expenses of the share issue.
“Option reserve” represents the cumulative cost of share based payments.
“Retained losses" represents retained losses.
FINANCIAL
LIABILITIES
The Group’s financial liabilities comprise trade payables. Financial liabilities are obligations to pay cash or
other financial assets and are recognised when the Group becomes a party to the contractual provisions of
the instruments.
TRADE
PAYABLES
Trade payables are initially measured at fair value and are subsequently measured at amortised cost, using
the effective interest rate method.
BORROWINGS
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are
subsequently carried at amortised cost; any difference between the proceeds (net of transaction costs) and
the redemption value is recognised in the Statement of Comprehensive Income over the period of the
borrowings, using the effective interest method.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement
of the liability for at least 12 months after the end of the reporting period.
BORROWINGS
COSTS
Borrowing costs are recognised in profit or loss in the period in which they are incurred.
29
Inspirit Energy Holdings Plc
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR
THE
YEAR
ENDED
30
June
2014
2
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(continued)
CURRENT
AND
DEFERRED
INCOME
TAX
The tax expense for the period comprises current tax. Tax is recognised in the Statement of Comprehensive
Income, except to the extent that it relates to items recognised directly in equity. In this case the tax is also
recognised directly in other comprehensive income or directly in equity, respectively.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at
the end of the reporting period in the countries where the Company’s subsidiaries operate and generate
taxable income. Management periodically evaluates positions taken in tax returns with respect to situations
in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on
the basis of amounts expected to be paid to the tax authorities.
SHARE
BASED
PAYMENTS
The Group operates equity-settled, share-based schemes, under which it receives services from employees
or third party suppliers as consideration for equity instruments (options and warrants) of the Group. The
Group may also issue warrants to share subscribers as part of a share placing. The fair value of the equity-
settled share based payments is recognised as an expense in the Statement of Comprehensive Income or
charged to equity depending on the nature of the service provided or instrument issued. The total amount to
be expensed or charged is determined by reference to the fair value of the options granted:
•
•
•
including any market performance conditions;
excluding the impact of any service and non-market performance vesting conditions (for example,
profitability or sales growth targets, or remaining an employee of the entity over a specified time
period); and
including the impact of any non-vesting conditions (for example, the requirement for employees to
save).
In the case of warrants the amount charged to equity is determined by reference to the fair value of the
services received if available. If the fair value of the services received is not determinable, the warrants are
valued by reference to the fair value of the warrants granted as described previously.
Non-market vesting conditions are included in assumptions about the number of options or warrants that are
expected to vest. The total expense or charge is recognised over the vesting period, which is the period over
which all of the specified vesting conditions are to be satisfied. At the end of each reporting period, the entity
revises its estimates of the number of options that are expected to vest based on the non-market vesting
conditions. It recognises the impact of the revision to original estimates, if any, in the Statement of
Comprehensive Income or equity as appropriate, with a corresponding adjustment to a separate reserve in
equity.
When the options are exercised, the Group issues new shares. The proceeds received, net of any directly
attributable transaction costs, are credited to share capital (nominal value) and share premium.
OPERATING
LEASES
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are
classified as operating leases.
Payments made under operating leases are charged to the Statement of Comprehensive Income on a
straight line basis over the period of the lease.
30
Inspirit Energy Holdings Plc
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR
THE
YEAR
ENDED
30
June
2014
3
FINANCIAL
RISK
MANAGEMENT
The Group is exposed to a variety of financial risks which result from both its operating and investing activities. The
Group’s risk management is coordinated by the Board of Directors, and focuses on actively securing the Group’s
short to medium term cash flows by minimising the exposure to financial markets.
The main risks the Group is exposed to through its financial instruments are market risk (including market price risk),
credit risk and liquidity risk.
MARKET
PRICE
RISK
The Group’s exposure to market price risk mainly arises from potential movements in the fair value of its derivative
financial instrument. The Group manages this price risk within its long-term strategy to grow the business and
maximise shareholder return.
impact of an
increase/decrease in the Company’s share price.
See below “fair value estimations”
that summarises
the
CREDIT
RISK
The Group’s financial instruments that are subject to credit risk are cash and cash equivalents and loans and
receivables. The credit risk for cash and cash equivalents is considered negligible since the counterparties are
reputable financial institutions. The credit risk for loans and receivables is mainly in respect of short term loans,
made on market terms, which are monitored regularly by the Board.
The Group’s maximum exposure to credit risk is £1,271,000 (2013: £32,000) comprising cash and cash equivalents
and loans and receivables.
LIQUIDITY
RISK
Liquidity risk arises from the possibility that the Group might encounter difficulty in settling its debts or otherwise
meeting its obligations related to financial liabilities. The Group manages this risk through maintaining a positive cash
balance and controlling expenses and commitments. The Directors are confident that adequate resources exist to
finance current operations.
The table below summarises the maturity profile of the Group’s financial liabilities based on contractual undiscounted
payments.
Group
At 30 June 2014
Trade and other payables
At 30 June 2013
Trade and other payables
Less than
1 year
Between 1
and 2 years
Between 2
and 5 years
Over 5
years
£’000
£’000
£’000
£’000
250
250
566
566
-
-
-
-
-
-
-
-
-
-
-
-
Total
£’000
250
250
566
566
Carrying
value
£’000
250
250
566
566
31
Inspirit Energy Holdings Plc
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR
THE
YEAR
ENDED
30
June
2014
3
FINANCIAL
RISK
MANAGEMENT
(continued)
CAPITAL
RISK
MANAGEMENT
The Group’s objectives when managing capital are:
•
•
•
to safeguard the Group’s ability to continue as a going concern, so that it continues to provide returns and
benefits for shareholders;
to support the Group’s growth; and
to provide capital for the purpose of strengthening the Group’s risk management capability.
The Group actively and regularly reviews and manages its capital structure to ensure an optimal capital structure and
equity holder returns, taking into consideration the future capital requirements of the Group and capital efficiency,
prevailing and projected profitability, projected operating cash flows, projected capital expenditures and projected
strategic investment opportunities. Management regards total equity as capital and reserves, for capital
management purposes.
FAIR
VALUE
ESTIMATION
The table below analyses financial instruments carried at fair value, by valuation method. The different levels
have been defined as follows:
• Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1).
•
inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2);
Inputs for the asset or liability that are not based on observable market data (that is, unobservable
inputs) (Level 3).
•
The following table presents the Group’s assets that are measured at fair value. The Group does not have
any liabilities measured at fair value.
Level 1
2014
Level 2
Level 3
Level 1
2013
Level 2
Level 3
£’000
£’000
£’000
£’000
£’000
£’000
-
-
*-
-
-
-
-
-
-
-
-
-
ASSETS
Financial assets at fair value through profit
or loss:
Derivative financial instruments
Total assets
*includes a fair value adjustment to £nil.
FINANCIAL INSTRUMENTS IN LEVEL 2
The fair value of financial instruments that are not traded in an active market (for example, over-the-counter
derivatives) is determined by using valuation techniques. These valuation techniques maximise the use of
observable market data where it is available, and rely as little possible on entity-specific estimates. If all
significant inputs required to fair value an instrument are observable, the instrument is included in Level 2.
If one or more of the significant inputs is not based on observable market data, the instrument is included in
Level 3.
Specific valuation techniques used to value financial instruments include:
•
•
quoted market prices or dealer quotes for similar instruments; and
the fair value of derivative financial instrument is calculated based on the Company’s quoted market
price and a prescribed formula in accordance with the respective equity swap agreement.
32
Inspirit Energy Holdings Plc
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR
THE
YEAR
ENDED
30
June
2014
4
CRITICAL
ACCOUNTING
ESTIMATES
AND
JUDGEMENTS
The preparation of Financial Statements in conformity with IFRSs requires management to make
judgements, estimates and assumptions that affect the application of policies and reported amounts of
assets and liabilities, income and expenses. Estimates and judgements are continually evaluated and are
based on historical experience and other factors including expectations of future events that are believed to
be reasonable under the circumstances.
CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates
will, by definition, seldom equal the related actual results. The estimates and assumptions that have a
significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the
next financial year are discussed below.
IMPAIRMENT OF GOODWILL
Goodwill has a carrying value of £nil (2013: £nil). The Group tests annually whether goodwill has suffered
any impairment, in accordance with the accounting policy stated in Note 2. The recoverable amounts of
cash-generating units have been determined based on value-in-use calculations.
Management has concluded that an impairment charge to the carrying value of goodwill of £663,000 was
necessary during the year. See Note 13 to the Financial Statements.
IMPAIRMENT
OF
DEVELOPMENT
COSTS
AND
INVESTMENTS
The Group tests annually whether development costs and investments in the subsidiaries, which have a
carrying value of £1,060,000 and £4,643,000, respectively (2013: £769,000 and £740,000, respectively),
have suffered any impairment, in accordance with the accounting policy stated in Note 2.
Investments are reviewed for impairment if events or changes in circumstances indicate that the carrying
amount may not be recoverable. When a review for impairment is conducted, the recoverable amount is
determined based on value in use calculations prepared on the basis of management’s assumptions and
estimates. There have been none in the year.
In respect of development costs, the recoverable amounts of cash-generating units have been
determined based on value- in- use calculations. The value –in- use calculations require the entity to
estimate future cash flows expected to arise from the cash generating unit and apply a suitable
discount rate in order to calculate present value. The recoverable amount of the development costs have
been determined based on value in use calculations. These calculations require the use of estimates
(Note 13). The Directors have concluded that no impairment charge is necessary.
FAIR
VALUE
OF
DERIVATIVE
FINANCIAL
INSTRUMENTS
The fair value of financial instruments that are not traded in an active market is determined by using
valuation techniques. The fair value of the equity swaps is calculated using the prescribed formula in the
equity swap agreement and the Group’s prevailing market price at the year end.
The Equity swaps have been fully impaired at the year end. If the Group’s prevailing market price at the
year end was 10% higher or lower, the carrying value of the equity swap would still be £nil.
SHARE
BASED
PAYMENTS
The Group has made awards of options and warrants over its unissued share capital to certain Directors and
employees as part of their remuneration package. Certain warrants have also been issued to shareholders
as part of their subscription for shares and to suppliers for various services received.
The fair value of options is determined by reference to the fair value of the options granted, excluding the
impact of any non-market vesting conditions. In accordance with IFRS 2 ‘Share Based Payments’, the
Company has recognised the fair value of options, calculated using the Black-Scholes option pricing model.
The Directors have made assumptions particularly regarding the volatility of the share price at the grant date
in order to reach a fair value. Further information is disclosed in Note 22.
33
Inspirit Energy Holdings Plc
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR
THE
YEAR
ENDED
30
June
2014
5
SEGMENTAL
INFORMATION
The Group’s primary reporting format is business segments and its secondary format is geographical
segments. The Group only operates in a single business and geographical segment. Accordingly no
segmental information for business segment or geographical segment is required.
6
DIRECTORS’
EMOLUMENTS
Aggregate emoluments
Social security costs
Name
of
director
J Gunn
J Nazhat
N Jagatia
N Luke
D Lenigas
Salary
and
fees
£
Benefits
£
66
37
14
60
-
177
-
-
-
-
-
-
2014
£
177
13
190
Total
2014
£
66
37
14
60
-
177
The Group does not operate a pension scheme and no contributions were paid during the year.
7
EMPLOYEE
INFORMATION
Wages and salaries
Social security costs
Average number of persons employed:
Office and management
COMPENSATION
OF
KEY
MANAGEMENT
PERSONNEL
There are no key management personnel other than the Directors of the Company (Note 6).
2013
£
-
-
-
Total
2013
£
-
-
-
-
-
-
2013
£
-
-
-
2014
£
140
13
153
2014
Number
2013
Number
5
-
34
Inspirit Energy Holdings Plc
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR
THE
YEAR
ENDED
30
June
2014
8
EXPENSES
BY
NATURE
S Salaries and wages (Note 7)
A Audit and other fees
Professional and consultancy fees
Recruitment
Operating lease rent
Rates
Motor and travelling
Depreciation
Other expenses
AUDITOR’S
REMUNERATION
During the year the Group obtained the following services from the Company’s auditor:
Fees payable to the Company’s auditor for the audit of the parent
company and the Group financial statements
Fees payable to the Company’s auditor and its associates for other
services:
Taxation compliance services
Other assurance services
9
OTHER
LOSSES
-‐
NET
Financial assets at fair value through profit or loss (Note 19)
Other income
10
FINANCE
COSTS
Interest expense:
Other loans
2014
£’000
13
1
1
2014
£’000
237
(40)
197
2014
£’000
11
11
2014
£’000
2013
£’000
153
15
213
15
52
10
8
1
39
506
-
-
8
-
14
8
2
1
9
42
2013
£’000
-
-
-
2013
£’000
-
-
-
2013
£’000
53
53
35
Inspirit Energy Holdings Plc
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR
THE
YEAR
ENDED
30
June
2014
11
INCOME
TAX
CREDIT
GROUP
Current tax credit on loss for the year
2014
£’000
(84)
(84)
2013
£’000
(17)
(17)
The tax on the Group's loss before tax differs from the theoretical amount that would arise using the
weighted average rate applicable to losses of the consolidated entities as follows:
Loss before tax from continuing operations
Loss before tax multiplied by rate of corporation tax in the UK of 20%
(2013: 20%)
Tax effects of:
Expenses not deductible for tax purposes
Unrelieved tax losses carried forward
Research and development tax credit
Total tax
2014
£’000
(1,377)
(275)
207
68
(84)
(84)
2013
£’000
(95)
(19)
1
18
(17)
(17)
The Group has excess management expenses of approximately £3,037,000 (2013: £1,379,000), capital
losses of £150,000 (2013: £150,000) and non-trade financial losses of approximately £119,000 (2013:
£119,000) to carry forward against future suitable taxable profits. No deferred tax asset has been provided
on any of these losses due to uncertainty over the timing of their recovery.
12
EARNINGS
PER
SHARE
Loss per ordinary share has been calculated by dividing the loss attributable to equity holders of the
Company by the weighted average number of shares in issue during the year. The calculations by both
basic and diluted loss per share for the year are based upon the loss for the year of £1,293,000 (2013:
£78,000). The weighted number of equity shares in issue during the year was 546,838,937 (2013:
350,000,000).
In accordance with IAS 33, basic and diluted earnings per share are identical as the effect of the exercise of
share options and warrants would be to decrease the loss per share and therefore deemed anti-dilutive.
Details of share options and warrants that could potentially dilute earnings per share in future periods are set
out in Notes 2.
36
Inspirit Energy Holdings Plc
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR
THE
YEAR
ENDED
30
June
2014
13
INTANGIBLE
ASSETS
GROUP
COST
At 1 July 2012
Additions
At 30 June 2013
Additions
Reverse acquisition
At 30 June 2014
ACCUMULATED AMORTISATION AND
IMPAIRMENT
At 1 July 2012 and 30 June 2013
Impairment charge
At 30 June 2014
NET BOOK VALUE
At 30 June 2013
At 30 June 2014
-
-
-
-
663
663
-
663
663
-
-
Goodwill
£’000
Development Costs
£’000
Total
£’000
644
125
769
291
663
644
125
769
291
-
1,060
1,723
-
-
-
-
663
663
769
1,060
769
1,060
The Goodwill relating to the Parent Company is attributable to the benefits derived from the listing of the
Parent Company and reflects the cost of the reverse acquisition and admission to AIM (Note 26). The
Directors have reviewed the carrying value of Goodwill at 30 June 2014 and consider that a complete
impairment provision is required in the year.
No amortisation has been recognised on development costs to date as the assets are still in the
development stage and the related products are not yet ready for sale.
The recoverable amount of the above cash-generating unit has been determined based on value-
in-use calculations. No goodwill is allocated to the Group’s cash generating unit as this related to the
Parent Company as explained above. The value-in-use calculations use cash flow projections based on
financial budgets approved by Management covering a seven year period. These incorporate potential
revenues which are based on project tenders and projected revenue. Given the nature of the work and the
visibility of revenue in the future, it is considered appropriate not to extend the cash flow workings beyond
this period.
The recoverable amount based on value-in-use exceeded the carrying value above. The impairment
review did not identify any impairment for recognition in the current or prior year.
37
Inspirit Energy Holdings Plc
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR
THE
YEAR
ENDED
30
June
2014
14
PROPERTY,
PLANT
AND
EQUIPMENT
GROUP
COST
As 1 July 2012
Additions
As 30 June 2013
Additions
As at 30 June 2014
DEPRECIATION
As at 1 July 2012
Charge for year
As at 30 June 2013
Charge for year
As at 30 June 2014
NET BOOK VALUE
As at 30 June 2013
As at 30 June 2014
Plant and
Equipment
£’000
7
-
7
-
7
Fixtures
and fittings
£’000
4
-
4
7
11
Motor
Vehicles
£’000
1
-
1
-
1
2
1
3
-
3
4
4
3
-
3
1
4
1
7
-
-
-
-
-
1
1
15
INVESTMENTS
COMPANY
At 1 July
Transfer to Investment in Subsidiary
16
INVESTMENT
IN
SUBSIDIARIES
COMPANY
SHARES IN GROUP UNDERTAKINGS:
At 1 July 2013
Transfer from investments
Reverse acquisition
Loans due from group undertakings
A
2014
£’000
740
(740)
-
2014
£’000
-
740
3,500
4,240
403
4,643
Total
£’000
12
-
12
7
19
5
1
6
1
7
6
12
2013
£’000
740
-
740
2013
£’000
-
-
-
-
-
-
Investments in Group undertakings are recorded at cost, which is the fair value of the consideration paid.
Details of Subsidiary Undertakings are as follows:
Name of subsidiary
Inspirit Energy
Limited
Somemore Limited
Country of
incorporation
England and
Wales
England and
Wales
Parent company
Registered
capital
Inspirit Energy
Holdings Plc
Ordinary shares
£15,230
Inspirit Energy
Limited
Ordinary shares
£1
Proportion of
share capital
held
100%
Nature of
business
Product
development
100%
Dormant
38
Inspirit Energy Holdings Plc
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR
THE
YEAR
ENDED
30
June
2014
17
INVENTORIES
Work in progress
18
TRADE
AND
OTHER
RECEIVABLES
Amounts due from group undertakings
Corporation tax
VAT recoverable
Other receivables – current
Other receivables – non-current
Unpaid share capital
Prepayments and accrued income
Less: non-current portion
Current portion
GROUP
2014
£’000
5
2013
£’000
5
COMPANY
2014
£’000
-
GROUP
COMPANY
2014
£’000
2013
£’000
-
84
41
42
-
1,025
12
1,204
-
1,204
-
17
4
-
-
-
10
31
-
31
2014
£’000
462
-
3
41
-
1,025
8
1,539
-
1,539
2013
£’000
-
2013
£’000
-
-
27
-
115
-
8
150
115
35
Other receivables amounting to £18,000 (2013: £Nil) include amounts due from related parties made on
normal market terms. The Directors consider that the carrying amount of short term loans and other
receivables is approximately equal to their fair value.
Unpaid share capital of £1,025,000 has been received since the year end.
19
DERIVATIVE
FINANCIAL
INSTRUMENTS
Equity swaps
GROUP
2014
£’000
-
2013
£’000
-
COMPANY
2014
£’000
-
2013
£’000
-
Included within derivative financial instruments are amounts receivable pursuant to an equity swap
agreement to be settled across 12 monthly instalments based on a formal agreement related to the
difference between the prevailing market price of the Company’s ordinary shares in any month and a
benchmark share price of 3.08 pence. Hence the net funds to be received by the Company are dependent
on the future performance price of the Company’s ordinary shares.
The Directors’ concluded that the fair value of the derivative financial instruments at 30 June 2014 is £nil
(2012: £nil).
39
Inspirit Energy Holdings Plc
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR
THE
YEAR
ENDED
30
June
2014
20
CASH
AND
CASH
EQUIVALENTS
Cash and cash equivalents
GROUP
COMPANY
2014
£’000
67
2013
£’000
1
2014
£’000
59
2013
£’000
-
The Directors consider the carrying amount of cash and cash equivalents approximates to their fair value.
All of the Company’s cash and cash equivalents are held with institutions with an AA credit rating.
21
SHARE
CAPITAL
AND
SHARE
PREMIUM
•
•
Number
of
ordinary
shares
•
Number
of
‘B’
ordinary
shares
Number
of
•
deferred
shares
•
Ordinary
shares
£ •
‘B’
Ordinary
•
shares
£ •
•
Deferred
shares
£ •
Share
premium
•
£ •
Total
£
62,603,190
1,221,200
400,932
62,603
1,221
393,923
3,887,762
4,348,509
8,333,333
612,982
1,590,000
-
−
-
-
-
-
8,333
613
1,590
-
-
-
-
-
-
91,667
100,000
17,776
18,389
14,310
15,900
73,139,505
1,221,200
400,932
73,139
1,221
396,923
4,011,515
4,482,798
350,000,000
154,110,886
60,088,753
7,000,000
10,000,000
-
-
-
-
-
1,221,200
(1,221,200)
-
-
-
-
-
-
-
-
-
-
350,000
154,111
60,089
7,000
10,000
-
-
-
-
-
1,221
(1,221)
-
-
-
-
3,150,000
3,500,000
-
-
-
-
-
-
2,152,889
2,307,000
735,061
795,150
58,800
65,800
40,000
50,000
-
-
(52,500)
(52,500)
396,923 10,095,765 11,148,248
At
30
June
2014
655,560,344
400,932
655,560
At
1
July
2012
Issue of new
shares
Share based
payment
Conversion of
convertible notes
At
30
June
2013
Issue of new
shares on
acquisition
Issue of new
shares
Share based
payments
Share warrants
exercised
Conversion of
convertible loans
Share conversion
from “B” to “A”
shares
Share issue costs
40
Inspirit Energy Holdings Plc
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR
THE
YEAR
ENDED
30
June
2014
21
SHARE
CAPITAL
AND
SHARE
PREMIUM
(continued)
The “B” ordinary shares and deferred shares have no voting rights.
On 28 June 2013, the Company announced the proposed acquisition of the remaining share capital of
Inspirit Energy Limited for an aggregate deemed consideration of £3.5 million, to be satisfied by the issue of
350,000,000 new ordinary shares in the Company. The acquisition constituted a reverse takeover under the
AIM Rules.
At the same time as the acquisition of the remaining share capital of Inspirit Energy Limited, the Company
raised £410,000 (gross) through a subscription for 41.0 million new ordinary shares at a price of 1 pence per
share. As part of the subscription, the subscribers were issued with one warrant for every two subscription
shares, comprising a total of 20.5 million warrants. The warrants are exercisable into ordinary shares at a
price of 1 pence per ordinary share at any time within 12 months from the date of re-admission to AIM. In
addition, the whole of the £50,000 convertible loan provided by Hebolux S.A. converted into 10,000,000 new
ordinary shares at the date of re-admission.
On 9 August 2013, the Company issued 1,250,000 new ordinary shares to Ascend Capital Plc for the
provision of corporate finance services.
On 29 August 2013, the Company raised £175,000 (gross) through the issue of 13,461,537 of new ordinary
shares at a price of 1.3 pence per share.
On 4 September 2013, the Company converted existing debt held by Global Investment Strategy (UK) Ltd
and John Gunn. The total debt and accrued interest of £706,680.25 was satisfied by the allotment of
54,360,019 ordinary shares of 0.1p each in at a conversion price of 1.3p each.
On 13 September 2013, the Company entered into a £472,000 Placing and an Equity Swap Agreement with
YA Global Master SPV, Ltd. ("YAGM") at 2.8 pence per share. YAGM subscribed for a total of 16,857,142
new ordinary shares at a price of 2.8 pence per share for a gross consideration of £472,000. Of this amount,
£236,000 will be paid back to YAGM under the Equity Swap Agreement from which the Company is
expected to receive a base amount of £19,666.67 per month for a 12 month period, depending on the future
price performance of the Company’s shares.
On 17 September 2013, the Company issued 1,978,733 new ordinary shares in settlement of professional
fees.
On 6 November 2013, the Company has received a conversion notice from a warrant holder to exercise
warrants over 1,000,000 ordinary shares at an exercise price of 1 pence per share.
On 25 February 2014, The Company raised £250,000 through the issue of 11,363,636 new ordinary shares
of 0.10p each in the Company at a price of 2.2p per share via direct subscriptions.
On 22 May 2014, the Company has received a conversion notice from a warrant holder to exercise warrants
over 6,000,000 ordinary shares at an exercise price of 1 pence per share.
On 26 June 2014, the Company has raised £1,000,000 through the issue of 71,428,571 new ordinary shares
of 0.1p each in the Company at a price of 1.4p per placing share via direct subscriptions.
41
Inspirit Energy Holdings Plc
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR
THE
YEAR
ENDED
30
June
2014
22
SHARE
BASED
PAYMENTS
Share options and warrants are granted to selected Directors and third party service providers.
Share options and warrants outstanding at the end of the year have the following expiry dates and
exercisable prices:
Weighted
Average
Exercise
Price
2014
0.2984
0.0100
0.0100
0.2114
0.0566
Options
and
warrants
3,412,620
20,500,000
(7,000,000)
(1,266,000)
15,646,620
Weighted
Average
Exercise
Price
2013
0.3611
0.0300
-
-
Options
and
warrants
2,766,000
646,620
-
-
0.2984
3,412,620
At
1
July
Granted
Exercised
Terminated
At 30 June
Grant
date
Expiry
date
18 April 2011
17 April 2021
18 April 2011
17 April 2021
26 April 2011
25 April 2021
13 Sept 2012
12 Sept 2015
26 July 2013
25 July 2014
Exercise
price
in
£
per
share
Number
of
options
and
warrants
2014
Number
of
options
and
warrants
2013
0.3500
0.0100
0.0488
0.0300
0.0100
0.0566
-
-
1,500,000
646,620
13,500,000
15,646,620
750,000
516,000
1,500,000
646,620
-
3,412,620
The share options and warrants originally granted in 2011 within Inspirit Energy Limited have now been
terminated.
The total weighted average contractual life of the outstanding options and warrants at 30 June 2014 was 0.72
years (2013: 6.53 years).
The fair value of the share options and warrants were determined using the Black Scholes valuation model.
The parameters used are detailed below:
Option granted on:
date
Shares and warrants under option
Option life (years)
Share price (pence per share) at grant
Risk free rate
Expected volatility
Expected dividend yield
Marketability discount
Fair value per option granted
(pence per share)
Exercise price (pence per share)
26 April 2011
1,500,000
10
4.50
3.71%
10%
Nil
5%
1.254
13 September
646,620
2012
3
3.00
3.71%
10%
Nil
5%
0.330
26 July 2013
20,500,000
1
1.15
2.50%
0%
Nil
0%
0.270
4.875
3.000
1.000
42
Inspirit Energy Holdings Plc
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR
THE
YEAR
ENDED
30
June
2014
22
SHARE
BASED
PAYMENTS
(continued)
For the 2011 and 2012 options and warrants, the expected volatility is based on historical volatility for the 6
months prior to the grant date. For those granted on 26 July 2013, there was no historic volatility as the
Company re-listed on AIM. The risk free rate of return is based on zero yield government bonds for a term
consistent with the option life.
Based on materiality, the total fair value of the options and warrants granted in the year has not resulted in
a change to the Statement of Comprehensive Income for the year 30 June 2014 (2013: £nil).
23
OTHER
RESERVES
Share
option
reserve
£’000
Merger
reserve
£’000
Reverse
acquisition
reserve
£’000
1 July 2013
Share based payments
30 June 2013
Cancellation of share warrants
Reverse acquisition
30 June 2014
23
-
23
(23)
110
110
24
TRADE
AND
OTHER
PAYABLES
-
-
-
-
-
-
-
-
Total
£’000
23
-
23
(23)
3,150
3,150
(7,361)
(4,101)
(7,361)
(4,101)
Trade payables
Other payables
Amount due to related parties
Social security and other taxes
Accrued expenses
Less: non-current portion
Current portion
GROUP
2014
£’000
2013
£’000
COMPANY
2014
£’000
65
62
9
32
82
250
-
250
16
-
520
24
6
566
-
566
53
8
9
12
81
163
-
163
2013
£’000
160
-
411
9
199
779
(411)
368
The Directors consider that the carrying amount of trade payables approximates to their fair value.
The Company entered into an unsecured loan facility on 28 June 2013 with Global Investments Strategy UK
Limited (“GIS”) for an aggregate maximum amount of £350,000. Amounts may be drawn down at the
discretion of the Company. Interest is payable on any drawdown at 5 per cent above the base rate of HSBC
Bank plc. Any amount drawn down under the loan facility shall be repayable 18 months from the date of the
loan facility. No amounts had been drawn down under this facility as at 30 June 2014.
On 4 September 2013, the Company approved the settlement of all existing debt held with GIS and Mr J
Gunn (Executive Director) through the issue of new shares. Total debt and accrued interest of £706,680
(including the liabilities of subsidiary Inspirit Energy Limited) was satisfied by the allotment of 54,360,019
new ordinary shares in the Company at a conversion price of 1.3 pence each.
43
Inspirit Energy Holdings Plc
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR
THE
YEAR
ENDED
30
June
2014
25
BORROWINGS
Non-current
Convertible loans
30 June 2013
GROUP
2014
£’000
2013
£’000
COMPANY
2014
£’000
2013
£’000
-
-
-
-
-
-
52
52
On 9 July 2012 the Company issued 50,000, 0% convertible loans at par value of £50,000 with Hebolux S.A.
No loans were converted into shares during the year ended 30 June 2013. The convertible loans would
have matured on 9 July 2015 and had a conversion price of £0.015 per ordinary share plus 50 per cent of
the subscription price if the Company relists.
The values of the liability and equity conversion component were determined at the date the loan notes were
issued. The fair value of the liability component was calculated using a market interest rate for an equivalent
non-convertible loan. The residual amount, representing the value of the equity conversion option was
deemed immaterial and therefore not included in shareholders’ equity.
As part of the acquisition of the remaining share capital of Inspirit Energy Limited, the whole of the £50,000
convertible loan provided by Hebolux S.A. converted into 10,000,000 new ordinary shares at the date of re-
admission.
The convertible loan recognised in the Company’s Statement of Financial Position is calculated as follows:
COMPANY
At 1 July
Face value of convertible loans
Liability component
Converted to ordinary shares
Reclassification of removal of conversion
rights
Interest expense
At 30 June
2014
£’000
52
-
52
(52)
-
-
-
2013
£’000
227
-
227
(16)
(190)
31
52
44
Inspirit Energy Holdings Plc
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR
THE
YEAR
ENDED
30
June
2014
26
BUSINESS
COMBINATIONS
During the year ended 30 June 2011 the Company acquired 17.05% of the share capital of Inspirit Energy
Limited for £740,000.
On 26 July 2013, the Company acquired the remaining 82.95% of the share capital and obtained control of
Inspirit Energy Limited for £3,500,000. Inspirit Energy Limited is an unlisted company registered in the
United Kingdom operating in the clean tech and renewable sector. The acquisition is in line with the
Company’s overall strategy as an investment company.
The acquisition has been treated as a reverse acquisition hence accounted for in accordance with IFRS 3,
as set out in the accounting policies. The following table summarises the consideration paid for Inspirit
Energy Holdings Plc through the reverse acquisition and the amounts of the assets acquired and liabilities
assumed at the acquisition date.
In accordance with IFRS 3, goodwill under a reverse acquisition is calculated on the net assets of the legal
parent. The goodwill of £663,000 arising from the acquisition is attributable to the value of the parent
company. The Directors do not consider goodwill reflects an increase in the Group’s assets and therefore
have impaired the goodwill in full.
Consideration
at
26
July
2013
Equity instruments in issue (73,139,505 ordinary shares at 1p each)
S TOTAL
CONSIDERATION
Recognised
amounts
of
identifiable
assets
acquired
and
liabilities
assumed
Cash and cash equivalents
Investments
Trade and other receivables
Trade and other payables
Borrowings
TOTAL
IDENTIFIED
NET
ASSETS
GOODWILL
£’000
731
731
£’000
-
740
159
(779)
(52)
68
663
In a reverse acquisition, the acquisition date fair value of the consideration transferred by Inspirit Energy
Limited is based on the number of equity instruments that Inspirit Energy Limited would have had to issue
to the owners of Inspirit Energy Holdings Plc to give the owners of Inspirit Energy Holdings Plc the same
percentage of equity interests that results from the reverse acquisition. However, in the absence of a
reliable valuation of Inspirit, the cost of the combination was calculated using the fair value of all the pre-
acquisition issued equity instruments of Inspirit Energy Holdings Plc at the date of acquisition. The fair
value was based on the published price of Inspirit Energy Holdings Plc shares on 26 July 2013 immediately
prior to the acquisition.
45
Inspirit Energy Holdings Plc
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR
THE
YEAR
ENDED
30
June
2014
27
FINANCIAL
INSTRUMENTS
BY
CATEGORY
The IAS 39 categories of financial instruments included in the Statement of Financial Position and the
headings in which they are included are as follows:
FINANCIAL
ASSETS
–
LOANS
AND
RECEIVABLES:
Trade and other receivables (excluding prepayments)
Cash and bank balances
FINANCIAL
ASSETS
–
FAIR
VALUE
THROUGH
PROFIT
OR
LOSS:
Derivative financial instruments
FINANCIAL
LIABILITIES
AT
AMORTISED
COST:
Trade and other payables
28
OPERATING
LEASE
COMMITMENTS
2014
£’000
1,192
67
-
2013
£’000
21
1
-
250
566
The Group leases an office under a non-cancellable operating lease agreement. The lease term is for one
year and the lease agreement is renewable at the end of the lease period at market rate.
The future aggregate minimum lease payments under non-cancellable operating lease are as follows:
GROUP:
No later than 1 year
29
ULTIMATE
CONTROLLING
PARTY
In the opinion of the Directors, Mr J Gunn is the ultimate controlling party.
30
RELATED
PARTY
TRANSACTIONS
Global Investment Strategy (UK) Limited
2014
£’000
36
36
2013
£’000
-
-
Mr J Gunn is a Shareholder and Director of Global Investment Strategy (UK) Limited (“GIS”). Ms J Nazhat
is also Director of GIS.
The Company entered into an unsecured loan facility on 28 June 2013 with GIS for an aggregate maximum
amount of £350,000. Amounts may be drawdown at the discretion of the Company. Interest is payable on
any drawdown at 5 per cent above the base rate of HSBC Bank plc. Any amount drawdown under the loan
facility shall be repayable 18 months from the date of the loan facility. No amounts were drawn down under
this facility as at 30 June 2013. GIS hold a fixed and floating charge over all assets of the Company.
On 4 September 2013, the Company converted existing debt held by GlS and John Gunn. The total debt
and accrued interest of £706,680.25 was satisfied by the allotment of 54,360,019 ordinary shares of 0.1p
each in at a conversion price of 1.3p each.
46
Inspirit Energy Holdings Plc
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR
THE
YEAR
ENDED
30
June
2014
30
RELATED
PARTY
TRANSACTIONS
(continued)
Other related parties
On 28 June 2013, the Company entered into a Discretionary Drawdown Facility (“DDF”) with Mr D Lenigas,
non-executive Chairman, which provides the Company with an equity facility up to a maximum aggregate
limit of £70,000. The facility is available for drawdown at any time, and for any specified amount at the
Company’s discretion, up to 17 May 2015. Mr D Lenigas is entitled to commission at 6.0% of any amount
received by the Company in accordance with the terms of the facility.
On 9 August 2013, the Company issued 1,250,000 new ordinary shares to Ascend Capital Plc for the
provision of corporate finance services, of which Mr N Jagatia is a Director.
On 26 June 2014, John Gunn, a Director of the Company, has agreed to invest £50,000 in a placing by
subscribing to 3,571,429 placing shares at 1.4p per share. At 30 June 2014, this amount is included within
other receivables (Note 18).
During the year, Montpelier Law Ltd, a company in which J Nazhat is a Director, charged corporate services
fees of £37,000. The amount owed to Montpelier Law Ltd at year end is £4,000.
During the year, NKJ Associates Ltd, a company in which N Jagatia is a Director, charged consultancy fees
of £14,000. The amount owed to NKJ Associates Ltd at year end is £2,000.
31
EVENTS
AFTER
THE
REPORTING
DATE
On 1 July 2014, the Company has concluded a more detailed manufacturing partnership agreement with
Malvern Boilers Ltd. This agreement will see the companies working closer together to achieve the joint
goals of producing the initial trial boilers for evaluation sites by the end of October 2014 and placing
Malvern in the controlling role of managing the production introduction and supply chain.
On 11 September 2014, Dr John Bannister joined the management team as a full time consultant to the
Company and special advisor to the Board.
On 18 September 2014, the Company has agreed to issue 3,398,056 new ordinary shares of 0.1p each in
the Company as settlement for professional fees.